ACCC gives green light for Winc to merge with OfficeMax

30 November 2017

The Australian Competition and Consumer Commission (ACCC) has announced that will not oppose the proposed acquisition of OfficeMax Australia by US private equity firm Platinum Equity, parent of Winc (formerly Staples).

The decision means that Platinum Equity is expected to merge the operations of Winc and OfficeMax Australia, following the agreement in April for Platinum Equity to acquire OfficeMax Australia from its US parent Office Depot.

In a statement to Stationery News, Winc president Darren Fullerton said: "It is very much business as usual for us at Winc as we continue to transform our business with our customers at the heart. Outside of this, we can't comment any further on the process or decision."

Earlier this month, the ACCC said it would also not oppose Complete Office Supplies' acquisition of OfficeMax Australia, following COS's last minute counter offer to buy OfficeMax Australia.

The future of the OfficeMax business in New Zealand remains in the hands of New Zealand's Commerce Commission, which earlier this month sought a High Court injunction to prevent Platinum Equity from acquiring OfficeMax New Zealand.

It has been mooted that the profitable OfficeMax New Zealand business could be the subject of a management buy-out.

Here's what the ACCC said in its statement, released yesterday:

The ACCC will not oppose the proposed acquisition of OfficeMax Australia (OfficeMax) by Platinum Equity.

"Following extensive market inquiries and analysis of documents and data, the ACCC has decided not to oppose this transaction. The ACCC believes the transaction will lessen competition but doesn't reach the threshold of causing a substantial lessening of competition," ACCC Chairman Rod Sims said.

"Any deal that sees the largest supplier acquiring the second largest in a market will require very close scrutiny. However, in a finely balanced decision the ACCC found that a combined Winc-OfficeMax would continue to face competition from the remaining key suppliers, Complete Office Supplies (COS) and Lyreco.

"Many large commercial and government customers put their contracts out to tender, and both COS and Lyreco have recently been successful in winning customers from Winc and OfficeMax. As a result, the ACCC considers that COS and Lyreco, combined with the ability of large customers to switch suppliers and to purchase products off-contract, are likely to provide a sufficient competitive constraint on the combined Winc-OfficeMax.

"The ACCC would also expect that if prices and returns increased through an exercise of market power by a combined Winc-OfficeMax, it is likely that other existing suppliers of office products would seek to grow their market share," Mr Sims said.

"The ACCC contacted many large commercial and government customers. While some were concerned about the transaction, there were also many that didn't engage with the ACCC. Where we are considering a horizontal merger such as this, we rely heavily on the views of customers," Mr Sims said.

The ACCC review focussed on the supply of traditional office products to large commercial and government customers.